Insiders Speculate Decline for Sony and Playstation 3

Last November, Microsoft faced intense criticism upon the release of its Xbox 360 console.

Many die-hard Xbox "fanboys" -- gamers dedicated to Bill Gates' wares -- were unable to purchase the system due to massive production shortages. Those with their eye on the industry recognized a ridiculousness in Microsoft's pitiful attempt to attract Japanese gamers (who typically flock to Nintendo and Sony events) when the North American market was starving for more Xbox 360s.

The end result? Millions in lost business on this side of the Pacific and thousands of 360s gathering dust in Japanese game outlets.

The Microsoft Xbox 360 launch -- 1 year before Sony or Nintendo could counterattack -- left much to be desired. And, the empty feeling felt by gamers with no 360 and hundreds of dollars burning a whole in their pocket played into Sony's favor, for as the Christmas and early 2006 period passed, the Sony Playstation 3 (PS3) launch grew closer.

And With the PS3 impending release just months away now, what are the chances that Sony could lose a massive market ($6-8 billion, reportedly larger than Canada's defense budget) it has dominated for a decade?

Dad, Can I Have $600?

According to insiders, chances are very good.

DFC Intelligence, a market analyst group, believes the hefty $599 USD price tag could prove too much for young gamers.

According to DFC, Sony is tapping into the smallest market -- the hardcore, rich gamer -- a demographic representing approximately 10% of the population. That leaves 90% of gamers looking to the other, cheaper consoles (the 360 and Nintendo Wii), both with their own strengths and weaknesses. (Source: gamespot.com)

The Microsoft 360, despite its launch struggles, has gained some momentum with its early launch. As far as technology goes, it easily trumps the upcoming Nintendo Wii, but cannot quite match the power of the PS3. In considering price and next-gen might, the Xbox 360 will be the middle-man in the coming three-way fight.

Nintendo's strangely named Wii will continue to pursue the younger market by releasing a very interesting (and gimmicky) controller that reacts to movement and not thumbs. It will feature the lowest graphical upgrade over this generation, but will challenge gamer wallets much less, as well.

Where does this leave the PS3?

Sony has controlled the console market through its mainstream pricing and software.

While the latter might not change, the considerable price point -- large enough that it taps into the powerful PC gaming market -- will force former Sony "fanboys" to reevaluate their allegiances.

Insiders are starting to see the cracks in Sony's foundation, many predicting that the 360 will grow in North America and the Wii will dominate Japan. The result may be a resurgence for Nintendo, which has not held sole possession of number one in the industry since the Super Nintendo Entertainment System (SNES) in the early 1990s. (Source: gamespot.com)

Clearly, Sony is counting on a belief that its huge fanbase will collectively open their wallets wide this November. If insiders are correct, however, the result might leave Sony feeling rather empty.